Capital flight dwarfs corruption – SACP

Capital flight is the biggest impediment to radical economic transformation and is a bigger problem even than corruption, SA Communist Party deputy general secretary Jeremy Cronin said on Wednesday.

Cronin and SACP general secretary Blade Nzimande released the SACP’s discussion document titled “A radical second phase of the national democratic revolution” in Cape Town, which lists capital flight as the biggest hurdle to development in the country.

“A much, much larger factor is this huge dissaving, this huge export of capital of surplus produced in South Africa and disappearing into transfer pricing, dividends paid to UK shareholders, illegal capital exports…” said Cronin.

“The problems of corruption, and they are serious, are dwarfed by this massive, massive loss of resources for our country…”

In the document, the ANC alliance partner singles out companies such as Absa Bank and Sasol as examples of how the trans-nationalisation of former South African-owned companies had led to the loss of investment, savings, and taxes for the country.

“Maria Ramos’s [Absa Group CEO] mandate comes from shareholders three-quarters of whom are not South Africans,” Cronin said.

“Maria Ramos will condemn corruption… but the much bigger problem… is the radical loss of wealth and surplus to our economy.”

Nzimande repeated calls for the re-nationalisation of Sasol, which was a state-owned entity until it was privatised in 1979.

“We really believe that that’s one huge injustice that has been done to our country,” said Nzimande.

“At the very least we had called for a windfall tax on Sasol because Sasol sells petrol that is produced here using international prices, so we have no advantage of the fact that we produce petrol locally.”

The SACP supported a windfall tax being imposed on Sasol, but an agreement was reached with national Treasury that the company would not pay the tax in exchange for increased investment locally.

“None of those things happened. The next thing Sasol is the single largest investor in the USA,” said Nzimande.

“We are still of the view that at the very least we need this windfall tax on Sasol.”

Both Nzimande and Cronin said exchange controls should be revisited, although they acknowledged the SA Reserve Bank had a different view.

“We’ve practised unprotected globalisation. It’s a very unwise thing to do,” said Cronin.